Countryside communities in England suffer from a "rural penalty" which the Government is not doing enough to address, a parliamentary report has warned.

Rural people face higher house prices and more expensive council tax bills, but receive less government funding for services like schools and suffer housing shortages and poor mobile phone and broadband coverage, said the report from the cross-party Commons Environment, Food and Rural Affairs Committee.

The committee branded the lower level of state funding for rural areas "deeply unfair" and warned that Government policies do not reflect the difficulties of providing services to populations who may be thinly spread over areas with relatively undeveloped infrastructure.

Although the coalition launched a Rural Communities Policy Unit in 2010 to "rural-proof" the Government's activities, the committee found that "much more needs to be done" if the Department for Environment, Food and Rural Affairs (Defra) is to meet its aim of "fair, practical and affordable outcomes" for residents and businesses in the countryside.

Rural areas make up 86% of England and about a quarter of the population - some 12.7 million people - live in the countryside. More than half a million businesses in rural areas make a £200 billion contribution to the national economy.

But the report found: "Too often Government policy has failed to take account of the challenges that exist in providing services to a rural population that is often sparsely distributed and lacks access to basic infrastructure. Rural communities pay higher council tax bills per dwelling, receive less government grant and have access to fewer public services than their urban counterparts.

"The Government needs to recognise that the current system of calculating the local government finance settlement is unfair to rural areas in comparison with their urban counterparts and take action to reduce the disparity. This 'rural penalty' is not limited to public services, it is also acute in many areas of infrastructure, not least the provision of high-quality broadband."

The committee highlighted funding for rural schools, which was less than half the level per pupil for urban areas in 2012/13. It warned that councils' ability to support smaller schools in rural areas is being hampered by a Government move to reduce flexibility in allocating funds. Broadband services in rural areas have "ridiculously slow speeds or no connection at all", and the Government's target to roll out superfast broadband to 90% of rural areas looks set to be delivered late, said the report.

A Defra spokesman said: "We want our rural communities to be great places to live and work, which is why we're investing in rural broadband, mobile coverage and providing funding to develop and grow rural businesses.

"The Government is helping hard-working people all over the country who aspire to own a home through Help to Buy, which will help people get onto the housing ladder and boost house-building wherever there are housing shortages."